In December of last year, SalesLogix shook up the CRM world by acquiring ACT!- -providing immediate access to an established base of more than 3 million users and returning the product to its original creator, Pat Sullivan. The company also announced Interact.com, an interactive application service that some analysts have touted as the new benchmark for the CRM industry. CRM Magazine writer Ginger Kernachan Cooper spoke with CEO Sullivan.

DCRM: When did you begin to seriously consider buying ACT! from Symantec, and what were your reasons?

Pat Sullivan: We began thinking about it in May 1999, and we had several reasons. First, we were building a new product, Interact, which is a Web-based application service, and we wanted access to an existing user base. Acquiring ACT! Gave us instant access to a huge community of users who needed the capabilities we were producing.

Second, more than 60 percent of SalesLogix customers are companies that upgrade from ACT!. So we saw a big opportunity in terms of providing a natural upgrade path for millions of ACT! users. Also, a lot of those responding to SalesLogix ads have been prospects who really needed ACT!, not SalesLogix. We didn't have a low-end product that met their needs, so we used valuable sales time pointing them toward contact managers. In that light, we felt that acquiring a low-end solution would give us more bang for our buck from our advertising dollars while also enabling us to use our selling time more effectively.

Finally, we saw that the acquisition made sense from Symantec's perspective. When John Thompson became Symantec's new CEO, he refocused the company on its core business- -security products and applications. Obviously, ACT! wasn't in that arena so it wasn't getting its due attention. Despite these factors, the product continued to have strong sales, meaning the strength of the product and brand were still there. I also had numerous people saying to me, "I'm an ACT! user. Why isn't Symantec doing anything with this product?"

DCRM: What about those who say you just wanted your baby back?PS: I'm hearing that a lot, but it really had little to do with my decision. Since I created ACT!, there was certainly an affinity there. But I approached the decision from the stance of whether or not it made good business sense. I have a very objective board, and we all agreed that the acquisition was a strategically smart thing to do.

DCRM: How receptive were Symantec executives to your proposal?PS: Given that ACT! no longer represented a strategic direction, they were very open to the idea of its being acquired. That said, they didn't let go easily. The negotiations were a bit like pulling teeth. Symantec had time on their hands- -they were sitting on an asset that generated lots of cash, so the need to sell wasn't that urgent. We approached them in May, and we would have preferred for the whole process to have wrapped up much more quickly than it did.

Also, Symantec was entertaining other offers. In September, this actually gave us quite a scare. I got word one day from several sources that a deal was done with another company. For 24 terrible hours, I didn't know if the rumor was true or not. It was an awful feeling. Fortunately, the rumor wasn't true.

On another note, we had one big factor playing in our favor. John Thompson knew that users were very loyal to ACT!.. Since I created ACT!, he was very receptive to my buying it back.

DCRM: Are you bringing over Symantec's ACT! development team?PS: Yes. I expect to get most of them. We will have a development facility in Northern California and a tech support facility in Eugene, Ore., so we're not forcing anyone to move to Scottsdale.

DCRM: You said Symantec did minimal marketing for ACT!. Will you be more aggressive about courting users of other well-known contact managers?
PS: Absolutely and always. Maximizer has changed hands a couple of times and has not moved forward particularly well. Goldmine has recently changed hands, so I think we may see some opportunities arising from that. Our introduction of Interact gives users of other products a compelling reason to switch to us rather than upgrading their current products. We will aggressively pursue those users.

DCRM: Do you envision ACT! eventually becoming the base module of SalesLogix, or will the two products remain separate?PS: They will stay separate. Brands mean something, and it's very hard to make a brand mean something other than what it already represents. ACT! is a great product for salespeople to get started with. It's easy to use, and it's geared to individuals. SalesLogix is a midmarket product that's more robust and that's focused on groups of users. We're positioning Interact as a powerful application for those wanting to run sales and CRM applications strictly on the Web. Our strategy is a multi-brand one, which I firmly believe is the most effective way to go.

DCRM: You now have ACT! for the low end and SalesLogix for the midmarket. With Interact in the picture, will you be going after the upper tier?PS: We won't directly pursue that market segment, but, for a couple of reasons, I believe many of these companies will come to us. My experience has been that as you capture mid-size companies, big companies get jealous. They see smaller companies using lots of cool sales applications while they're still paying Big 5 firms millions of dollars just to talk about CRM. So they end up purchasing mid-market products and deploying them. SalesLogix, and I'm sure other midmarket CRM vendors, have benefited from this.

Also, I believe that software is rapidly becoming a service- -something you subscribe to or rent as opposed to something you license or buy. As this trend gains momentum, our ability to build enterprise-like functionality into Web-based applications is phenomenal. The initial release of Interact will be powerful- -the architecture is designed to support millions of users simultaneously on the Web. The scale with which we are building Interact from Day 1 is enormous. Could Interact serve a 5,000-person sales force at a Fortune 500 company? You bet.

DCRM: What's your marketing strategy for Interact?PS: Initially, we will target ACT! and SalesLogix users. Then we will go after the Palm Network community and expand from there. For companies wanting to use nothing more than thin client browsers to gain certain sales capabilities, Interact provides a solution. A whole market is developing along those lines, so we will go after that market as well.

I really believe we have an extremely compelling story with Interact because it's so tightly integrated.
If you look at the so-called Internet applications today, there is some neat stuff, but it's not well integrated. Even if you look at Palm 7- -which I think is one of the coolest devices ever built- -none of the various applications are integrated. What we're building is totally integrated, and it provides a whole new way of selling. Salespeople who disconnect from the Web still need access to their data, and Interact makes that possible.

DCRM: Can people purchase Interact as a standalone product, or do they have to purchase ACT! or SalesLogix to access it?PS: They can do either, but, of course, they'll greatly extend their use of Interact if they purchase one of our other products. Not surprisingly, we'll do bundled incentives to encourage this.

DCRM: On a personal note, do you feel like you're experiencing the comeback of Pat Sullivan?PS: I don't feel like I ever left. I also don't feel like SalesLogix has gotten its due, given all that we've accomplished. We've passed Pivotal in terms of revenue, and we've been growing at 150 percent year over year. But we haven't gotten as much press, largely because we serve the lower end of the marketplace.
That said, in terms of introducing Interact and acquiring ACT, SalesLogix is now more on the map than it has ever been. As for Interact, we want to be the largest provider of this new breed of software. We've introduced a killer app, and I believe that the way in which we've done it will be difficult for other vendors to match.

DCRM: Where is all of this heading?PS: The strategy we've embarked upon will ultimately make us the largest vendor in this space. Because of our acquisition, we now have several million users to market to. With ACT!, SalesLogix and Interact under one roof, we also have the means by which to own the low end up through the rest of the marketplace.